LatAm mobile telcos fight for Internet dominance

MEXICO CITY, SPAIN: With cell phones and portable computers in the hands of more Latin Americans, mobile telephone companies like America Movil and Telefonica could soon become the region's main Internet service providers.

Mobile heavyweights America Movil, Telefonica and Entel are upgrading their networks to allow faster Internet access through laptop computers and telephone handsets that let clients check their email and surf the Web.

Internet-ready telephones like Apple Inc's iPhone and Research in Motion's Blackberry are expensive for most Latin Americans but are seen gaining ground as prices fall.

"Information and communications technologies, including the handset, the connection and content are desirable. Families and individuals want more of these services," said telecom specialist Ernesto Piedras, of the Competitive Intelligence Unit consultancy in Mexico City.

Traditional fixed-line telephone companies like Telmex and Telmex Internacional -- both owned by Mexican tycoon Carlos Slim -- dominate the Internet connection market in Latin America.

But they are facing tougher competition from cellular operators offering Internet hookups with similar prices and speeds, with the added benefit of being mobile.

Pushing Broadband

America Movil, the region's top mobile phone operator that is also controlled by Slim, has launched a high-speed mobile network to expand Blackberry and iPhone use.

Aiming to create clients for its small but growing business of selling Internet access for computers, America Movil is set to offer netbooks and laptops.

Its company in Mexico, Telcel, now promotes mobile Internet connection packages for computers at prices comparable to those sold by Telmex. "We're going to see more and more growth in wireless Internet, above all in America Movil and Telefonica and slower expansion for Telmex," said an industry analyst who is not authorized to speak to the media.

Telmex, which for several years has been selling home computers on installment to build up its customer base, has increased its broadband clientele by 66 percent per year over the past three years and now has 5.52 million users.

But the company appears already to be feeling pressure from competition, with lower average revenue per user declining in the January-March period.

America Movil's revenue from Internet-related services is increasing at 50 percent annually and could account for a quarter of sales within three years, Chief Financial Officer Carlos Garcia-Moreno told Reuters last week.

Spain's Telefonica, America Movil's main competitor in Latin America, also told Reuters that mobile Internet is one of its fastest-growing services